Washington State Legislators Get Bill That Would Let Credit Unions Pay Board Members

State legislators in Washington will be reviewing two bills that would give state-chartered credit unions the option to pay their board members, gain access to supplemental capital and expand investment options.

The NWCUA also is behind Senate Bill 5302, which is similar to the House bill. However, S.B. 5302 does not include the supplemental capital provision. The Senate bill also is scheduled for a hearing Thursday before the Senate’s Housing and Insurance Committee.

In addition to giving Washington credit unions the option to provide board members with “reasonable compensation,” both bills would give credit unions the option to compensate supervisory committee members as well.

As the proposed law is written, a credit union “may pay its directors and supervisory committee members,” but there is no wording in the proposed law to require credit unions to pay directors.

The option to compensate board members has been discussed and researched at the NWCUA since 2009, said Lynn Heider, the association’s vice president of public relations and communications. The association’s Evolution Task Force and Government Affairs Committee earlier recommended the option to pay board members under rules that would be set by the state’s regulator.

“This may help some CUs to attract and retain a more diverse board,” said Heider.

Meanwhile, the House bill’s provision that would enable state-chartered credit unions to pursue supplemental capital would only take effect if federal legislation opening supplemental capital to credit unions would be enacted. The proposed state legislation refers to supplemental capital as “accounts or instruments that are not shares or deposits, are not insured … and are included in the credit union’s net worth.”

“Should credit unions have access to additional capital beyond earnings, they could grow faster and still meet prompt corrective action well capitalized expectations,” said Umholtz.

What’s more, the House and Senate bills would allow Washington credit unions to make investments with a “registered investment company or collective investment fund, as long as the prospectus of the company or fund restricts the investment portfolio to investments and investment transactions that are permissible for credit unions.”

The bills also include a provision that if an investment later becomes impermissible because of a change in circumstances or law or if it’s determined the investment will have an adverse effect on the safety and soundness of the credit union, the state’s regulator would be authorized to order the credit union to pull the plug on the investment.